The embodiments disclosed herein relate to the management of material movement and inventory, and more particularly to a method and system for efficiently transporting and warehousing large quantities of material.
It is known to make material sourcing decisions based initially or primarily upon unit manufacturing cost. In such cases, one department selects a supplier based on manufacturing costs and then another department is responsible for arranging economical and timely shipping. However, in the current economic climate in which many goods are manufactured overseas, the transportation costs can be a large percentage of the overall acquisition cost. Furthermore, the proper timing of shipments is important given the longer lead time required for long distance shipping.
Various systems have been developed to optimize acquisition and/or movement costs for large quantities of goods. U.S. Pat. No. 5,450,317 discloses a logistics planning method and system for recommending optimal order quantities and timing, choice of vendor locations and storage locations, and transportation modes, for individual items and product families. Four different databases are accessed to provide forecasts of customer demand, warehouse demand, and transportation costs. A dynamic programming model is used to determine order and shipment solutions, including optimized selection of the supplier, routing, order timing, and order quantity.
U.S. Pat. No. 6,341,266 is directed to a method and system for managing inventory in a multiple level distribution chain. The system is designed to minimize transportation costs, avoid bottlenecks, and prioritize demands if a bottleneck occurs. The method involves initializing a range of coverage profile with a starting value, computing the inflows necessary to fulfill the profile constraints, constructing the cheapest flow for these demands, and then lowering or enlarging the range of coverage profiles until a solution is found.
The systems disclosed in U.S. Pat. Nos. 5,450,317 and 6,341,266 rely heavily upon computerized algorithms that use input data to generate a comprehensive output solution. From a practical standpoint, however, users of such planning systems may not always be kept up-to-date with pertinent input data and options. Employee turnover may require the time-consuming training of new users of these programs. Furthermore, certain important variables involved in planning, shipping, etc. may not be readily quantified for use as input data. Thus, known systems for selecting and shipping material may not necessarily optimize the overall process of acquiring, shipping and warehousing material. It would be useful to develop a simple and practical system and method for managing material movement and inventory that relies upon both computer-generated estimates and input from other knowledgeable sources.